Roughly $4 billion of asset-backed supply was marketed last week, backed primarily by off-the-run assets, with the largest offering of the week an office equipment lease securitization from The CIT Group. Also, American Express brought its second five-year credit card offering of the quarter, a part of the curve that has seen the most interest from the buyside within the sector.
CIT, in the midst of being spun off from Tyco in an IPO, brought its first ABS of the year last week, offering $1.1 billion of office equipment lease-backed notes through Deutsche Bank. The collateral for this offering illustrates the long and complex history of M&A activity that has led to the current entity that is CIT.
Leases in this pool were originated by a variety of entities: CIT, Newcourt Credit (acquired by CIT in 99) and AT&T Capital (acquired by Newcourt in 1998). As a result of this lineage dating back to AT&T Capital, the leading equipment types in this deal are computers (54%) and telecommunications (32.5%), according to Fitch Ratings.
The deal offered good value, with one-year seniors yielding 35 basis points over and the three-year at 38 basis points over Swaps. Single-A and triple-B-rated subs came in at 132 and 205 basis points over, respectively.
American Express priced its third Optima credit card-backed deal of the year, all of which have been five-year floaters, and the second of the quarter. AmEx 2002-1 priced Feb. 13 via JPMorgan, and 2002-2 priced April 18 via Salomon Smith Barney. So far this quarter, seven five-year credit card deals have been brought, for a total of $4.5 billion.
AmEx's latest deal priced right in line with the market, which has been stable for top-tier issuers throughout the year. AmEx priced its senior class at 11 basis points over one-month Libor, exactly where it had priced its previous offerings this year.
This supply indicates continued demand from the buyside for credit card paper, despite the rich levels seen through the year. "There are still pockets of demand for credit card paper," commented Barclays Capital researcher Jeff Salmon. "Especially in Europe."
Many of the credit card deals seen lately have been driven by reverse inquiry demand for single-A and triple-B-rated subs, although reverse inquiry demand could not be confirmed for AmEx 2002-3.
Looking forward, Bank One Issuance Trust is reportedly planning to bring its first senior offering from its new issuance vehicle in the near term, following the $500 million of subs that priced April 24, allowing for roughly $3 billion of pre-enhanced senior issuance. Size and structure were not yet decided upon.
And following numerous investor meetings, The Metris Companies are planning its first credit card securitization of the year through JPMorgan as bookrunner. This is on the heels of an agreement with the OCC, which restricts Metris' access to insured deposits, thus increasing the dependence on ABS for funding (See ASR 4/22/02).
In home equity, GMAC-RFC, First Franklin and Merrill Lynch Mortgage Investors all brought medium-sized transactions last week. GMAC-RFC brought $365 million of high loan-to-value (102%) collateral from its RAMP RZ first lien shelf via Salomon Smith Barney as lead. First Franklin sold $632 million of home equity notes through Greenwich Capital and MLMI brought $196 million of New Century-originated loan-backed notes.
The healthcare sector had two transactions making the rounds last week, $150 million of Sky Financial dental equipment loan-backed notes through BB&T Capital Markets and Red Securities and HFG Healthco-4 was marketing $100 million of Medicaid, Medicare and Blue Cross/Blue Shield receivables-backed notes via Morgan Stanley, which has an ownership interest in the first-time securitizer.
Sky, which saw strong interest for its first deal of the year, priced the fixed-rate three-year senior A1 at 103 basis points over Swaps and 1.7-year senior A2 to yield 130 basis points over Swaps. As of press time HFG was still marketing its floating-rate offering.
Samsung Auto is still shopping its $288 million Korean auto loan-backed deal in the market from Merrill as bookrunner, with guidance for the MBIA wrapped three-year single-tranche deal in the mid 40 basis-point area over one-month Libor.
